sif-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-5978

SIFCO Industries, Inc.

(Exact name of registrant as specified in its charter)


Ohio						34-0553950
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

970 East 64th Street, Cleveland Ohio						44103
(Address of principal executive offices)						(Zip Code)

(216) 881-8600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares

SIF

NYSE American

The number of the Registrant’s Common Shares, par value $1.00, outstanding at June 30, 2022 was 6,039,617.

Part I. Financial Information

Item 1. Financial Statements

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Statements of Operations

(Unaudited)

(Amounts in thousands, except per share data)


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Net sales	$	21,454	$	25,330	$	65,269	$	75,274
Cost of goods sold	21,080		22,040		63,427		65,317
Gross profit	374		3,290		1,842		9,957
Selling, general and administrative expenses	2,821		2,912		9,037		10,336

Amortization of intangible assets	62		248		252		765
Gain on disposal of operating assets	—		—		(2)		—
Gain on insurance recoveries	—		—		—		(2,495)
Operating (loss) income	(2,509)		130		(7,445)		1,351

Interest expense, net	146		143		453		478
Gain on debt extinguishment	—		(287)		(5,106)		(287)
Foreign currency exchange (gain) loss, net	(7)		1		2		22
Other expense (income), net	23		55		(45)		158
(Loss) income before income tax benefit	(2,671)		218		(2,749)		980
Income tax benefit	(3)		(36)		(29)		(776)


Net (loss) income	$	(2,668)	$	254	$	(2,720)	$	1,756










Net (loss) income per share
Basic	$	(0.46)	$	0.04	$	(0.47)	$	0.31
Diluted	$	(0.46)	$	0.04	$	(0.47)	$	0.29

Weighted-average number of common shares (basic)	5,840		5,779		5,827		5,753
Weighted-average number of common shares (diluted)	5,840		6,006		5,827		5,960

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Statements of Comprehensive (Loss) Income

(Unaudited)

(Amounts in thousands)


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Net (loss) income	$	(2,668)	$	254	$	(2,720)	$	1,756
Other comprehensive (loss) income:
Foreign currency translation adjustment, net of tax $0 and $0 for the three months ended and net of tax $0 and $0 for the nine months ended, respectively	(304)		79		(563)		62
Retirement plan liability adjustment, net of tax $0 and $0 for the three months ended, net of tax $0 and $0 for the nine months ended, respectively	188		211		426		634

Comprehensive (loss) income	$	(2,784)	$	544	$	(2,857)	$	2,452

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Balance Sheets

(Amounts in thousands, except per share data)


	June 30, 2022		September 30, 2021
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	111	$	346
Receivables, net of allowance for doubtful accounts of $127 and $167, respectively	16,700		19,914

Contract assets	11,936		12,874

Inventories, net	12,515		12,546
Refundable income taxes	101		101

Prepaid expenses and other current assets	1,266		1,792


Total current assets	42,629		47,573
Property, plant and equipment, net	40,248		42,708
Operating lease right-of-use assets, net	15,239		15,943
Intangible assets, net	567		874
Goodwill	3,493		3,493
Other assets	88		77

Total assets	$	102,264	$	110,668
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	4,079	$	9,566
Revolver	10,113		8,930
Short-term operating lease liabilities	763		788
Accounts payable	10,578		9,811
Accrued liabilities	5,612		6,871

Total current liabilities	31,145		35,966
Long-term debt, net of current maturities	2,902		2,669
Long-term operating lease liabilities, net of short-term	14,855		15,439
Deferred income taxes	155		158
Pension liability	5,517		6,073
Other long-term liabilities	722		741

Shareholders’ equity:
Serial preferred shares, no par value, authorized 1,000 shares	—		—
Common shares, par value $1 per share, authorized 10,000 shares; issued and outstanding shares 6,040 at June 30, 2022 and 5,987 at September 30, 2021	6,040		5,987
Additional paid-in capital	11,268		11,118
Retained earnings	38,876		41,596
Accumulated other comprehensive loss	(9,216)		(9,079)
Total shareholders’ equity	46,968		49,622
Total liabilities and shareholders’ equity	$	102,264	$	110,668

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Statements of Cash Flows

(Unaudited, Amounts in thousands)


	Nine Months Ended June 30,
	2022		2021
Cash flows from operating activities:
Net (loss) income	$	(2,720)	$	1,756

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	4,800		5,710
Amortization of debt issuance costs	30		62
Gain on disposal of operating assets	(2)		—
Gain on insurance proceeds received for damaged property	—		(2,495)

LIFO effect	586		582
Share transactions under company stock plan	203		362



Gain on extinguishment of debt	(5,106)		(287)
Other long-term liabilities	(104)		49
Deferred income taxes	(18)		(891)
Changes in operating assets and liabilities:
Receivables	2,730		3,094
Contract assets	938		(2,670)
Inventories	(1,052)		(823)

Prepaid expenses and other current assets	479		192
Other assets	(13)		50
Accounts payable	828		115
Other accrued liabilities	(857)		(1,561)
Accrued income and other taxes	(25)		207

Net cash provided by operating activities	697		3,452

Cash flows from investing activities:
Insurance proceeds received for damaged property	—		4,101
Proceeds from disposal of operating assets	2		—
Capital expenditures	(2,501)		(5,875)

Net cash used for investing activities	(2,499)		(1,774)

Cash flows from financing activities:
Proceeds from long-term debt	1,402		1,020
Payments on long-term debt	(1,039)		(341)
Proceeds from revolving credit agreement	59,668		67,043
Repayments of revolving credit agreement	(58,486)		(70,089)
Payment of debt issuance costs	—		(45)


Short-term debt borrowings	2,762		3,535
Short-term debt repayments	(2,715)		(2,999)


Net cash (used for) provided by financing activities	1,592		(1,876)
Decrease in cash and cash equivalents	(210)		(198)
Cash and cash equivalents at the beginning of the period	346		427
Effect of exchange rate changes on cash and cash equivalents	(25)		18
Cash and cash equivalents at the end of the period	$	111	$	247

Supplemental disclosure of cash flow information of operations:
Cash paid for interest	$	(423)	$	(296)
Cash paid for income taxes, net	$	(23)	$	(22)

See notes to unaudited consolidated condensed financial statements.

SIFCO Industries, Inc. and Subsidiaries

Consolidated Condensed Statements of Shareholders’ Equity

(Unaudited, Amounts in thousands)


	Nine Months Ended June 30, 2022
	Common			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount









Balance - September 30, 2021	5,987	$	5,987	$	11,118	$	41,596	$	(9,079)	$	49,622

Comprehensive loss	—	—		—		(2,720)		(137)		(2,857)

SEC Form 10-Q filed by SIFCO Industries Inc.